Credit, collections & insolvency news

Local authorities from across the UK will next month come together to discuss ways of transforming their debt collection practices.

Credit management firm Intrum UK and its joint venture partner Hammersmith & Fulham Council have launched an ethical debt collection conference to drive change in council collections after a series of reports suggested the public sector is lagging behind private sector standards.

Pressure has been growing for councils to reduce the use of bailiffs and adopt practices used in financial services.

In December, the Money Advice Service (MAS) launched strategic guidance to support local authorities in taking a more progressive approach to council tax recovery.

MAS evaluation reports show a third of people seeking debt advice have council tax arrears. It is keen to see fairer outcomes, improved resident engagement and sustainable arrears payments, through greater collaboration with debt advice agencies. The report covered ten councils across the UK that have been making changes and called on all 348 local authorities to do the same.

“Their best practice approach has proven that a collaborative approach with debt advice agencies tend to collect a high percentage of monies owed, as well as supporting better outcomes for residents,” it said.

Too often, councils move quickly to bailiff use. Citizens Advice says one person a minute experiences a bailiff breaking the rules and claims government reform in this area has failed.

Rushanara Ali, MP and member of the Treasury Select Committee is among those who will address senior local authority figures at the London event on February 7th. In July 2018, the Treasury Select Committee published its report on household finances, calling for reform to ‘uncompromising’ local government collections and suggesting there is much to learn from best practice in the private sector.

Intrum and Hammersmith & Fulham formed their joint venture H&F Ethical Debt Collection in 2017 to embed Financial Conduct Authority standards in council collections. H&F has pledged to end the use of bailiffs for council tax and Intrum is now working with a range of other councils to change their approach.

The free event, which is open to relevant personnel from councils, will hear from leading experts in the charity sector, financial regulation and local government. Attendees will also be able to see demonstrations of cutting-edge collections technology that transforms the approach they can take.

Eddie Nott, Managing Director for Intrum UK, said: “Local authorities face the difficult task of reforming collection practices while ensuring maximum returns to fund essential services. Fortunately, cutting the use of bailiffs doesn’t have to mean a reduction in revenues.”

He added: “Ethical collections offer a smart approach, not a soft option. Learning from best practice in the highly-regulated private sector means councils can raise their collections and ensure residents have a positive experience. Building relationships and negotiating sustainable payment plans reduces the risk to vulnerable residents and protects vital public services from further cuts.”